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House approves 25% cap for state trust land royalties on Permian parcels after heated debate
Summary
After hours of debate about competitiveness and community impacts, the House passed a bill allowing the commissioner of public lands to set a 20–25% royalty range on state trust land in the Permian Basin; supporters said the change protects trust beneficiaries, opponents warned of lost jobs and slower drilling.
The House voted to allow the commissioner of public lands to set higher royalty rates on the most productive state trust land in the Permian Basin, approving a Senate bill that lets some leases be offered at up to 25% royalty.
Supporters said the increase will return more money to the state trust (which funds public schools and university scholarships) and bring the state’s royalty policy closer to private and neighboring rates. “This is not a tax or fee,” Representative Matthew McQueen (sponsor, Santa Fe) told colleagues. “We’re selling something we own and asking a fair market price.”
Opponents said the move risks driving independent producers and smaller service companies out of New Mexico. Representative Ethan Block (Otero) and others warned that higher rates could reduce lease bonuses, shorten production lives for some wells and discourage exploratory drilling on the basin’s fringes. Debate included repeated questions about how the change would affect existing leases, production timelines and the relative competitiveness of state versus federal and Texas leases.
Lawmakers discussed multiple technical points: how bonuses and primary terms work, the state land office’s authority to withhold parcels from lease, and the effect of higher royalties on smaller operators who often start discoveries that larger companies later develop. Supporters said the state land commissioner will continue to set rates case-by-case, and that the bill enables, rather than mandates, 25% for only some high-value parcels.
Final outcome: the House passed the measure on a roll-call vote, 37 yeas to 31 nays. The bill sends the change to the governor’s desk and will allow future lease notices to show the factors used in rate-setting.
Ending: The bill’s proponents said projected additional revenue would flow into the land grant permanent fund for schools and other trust beneficiaries, while opponents promised to monitor leasing activity and job metrics as the new rates are implemented.
